Is PayPal Here Another Case for Mobile Device Management

Yesterday PayPal launched Paypal Here, dubbed “The Future of Commerce for Small Business”, over a year after Square launched arguably prettier device that has enjoyed great commercial success. Both devices come with free iPhone app that turns your phone into a credit card terminal – just swipe the card and you’re done. So far the reviews for the device are not pretty, both regarding the cosmetic appearance of the device and the fee structure.

Paypal Here Facts:

- Free iPhone App

- 2.7% transaction fee

- Free fraud protection

This proliferation of the smartphone as a swiss army knife of small business has many managed service providers talking about mobile device management as the next great opportunity but those hopes remain unfounded for several reasons.

Carriers have to get paid – The first and perhaps biggest problem with managing mobile devices is that the model is biased towards device manufacturers and carriers, if they aren’t getting paid for a large market opportunity you typically find their competitors end up displaced. You’re cirtually guaranteed always to be a step behind.

Small businesses are already paying too much – The stats on how many mobile phone users decline insurance and replacement plans is astonishing, considering that a replacement device is typically purchased at a non-subsidized retail rate. The likelyhood that they will pay even more to have the device “managed” is rather low because after all you already have a desk phone, right?

You saved what on your phone? – This is as true for small business as it is for large business: When confronted with a threat, CIOs and business owners tend to make policies that nothing sensitive is to be stored on the phone. “It’s going to cost us $6,000 a year for this management service… or you can just do the banking operations on your desktop. I think we just saved $6K!”

Those are “Paris Hilton” problems – This is by far the worst argument but one that I hear from my partners all the time: “We don’t store naked pictures on our phones, it wouldn’t be a great loss if the device was lost/stolen.” No, but they do store email, which contains passwords and identifiable information. Possibly even pictures of contracts, prototypes, etc.

However as long as the customers don’t believe there is a value to their phone beyond the convenience factor, MDM is going nowhere.

Conclusion

Managed Services Providers are desperate not just for another source of revenues but are also fearful that the carriers will try to use the iPhone/Android platform they have exclusivity over as a launching pad to the rest of the small business. After all, when something breaks with the phone the MSP isn’t the one standing in the line at the Verizon or AT&T store – and those stores are built to sell small business all sorts of services. At what point do the businesses see their phone as more than a convenience and a critical part of their IT that they are willing to pay a lot of money for management? Most successful MSPs aren’t waiting for that day, they are changing their model to manage all the devices that the user touches, structuring plans around users instead of devices. That is definitely a winning strategy but it comes at a cost – of additional tools and services needed in order to mange these devices. Lower margins or less business, that is the question. Or is it?